Markets were abuzz--relatively speaking--with overnight news that the latest hopes for a Greek debt deal were dashed over the weekend.  This was theoretically the reason behind the big rally in sovereign debt.  In truth, it DID have an impact in bond markets, but the impact is not nearly as big as it's made out to be. 

To hear some media outlets say it, Greece is flat-out causing directional movement in broader bond markets.  No...

Broader bond markets are moving where they want to move, and Greece provides only fine-tuning adjustments.  The correlation is so poor, overall, that it's completely lost in the bigger picture. The white ovals in the chart below show the trading activity that took place today.  

Granted, if we zoom the chart in to very specific time frames, we can observe the correlation implied by media headlines, but it's actually much easier to find examples where that correlation breaks down completely.  We're at the point now where headlines come out regarding a surprise Greek debt deal and markets barely bat an eyelash. 

Such was the case this afternoon with one particular headline:

BN-EURO-ZONE COUNTRIES REACH GREECE EMERGENCY PLAN: SUEDDEUTSCHE

shortly thereafter:

RTRS- GREEK GOVT OFFICIAL DENIES GERMAN NEWSPAPER REPORT ON PLAN FOR
GREECE TO IMPOSE CAPITAL CONTROLS THIS WEEKEND IF TALKS FAIL

What's the point of caring too much if this is the rule as opposed to the exception? 

In real news, bond markets continue trading well within the recent range as the FOMC approaches.  Compared to yesterday, we ended in positive territory, but the gains were in by early morning and the rest of the day was spent selling off.